CYPRUS AIRWAYS and Eurocypria cannot continue to co-exist in Cyprus’ small aviation market, a recent study has concluded.
The study, which was commissioned by and presented to the public by five Cyprus Airways unions, made clear that both airlines could not operate successfully in the current competitive aviation climate.
Eurocypria is 100 per cent owned by the state, which purchased it in 2006 from Cyprus Airways, which is itself majority owned by the government. Cyprus Airways has for the last six months been suggesting that Eurocypria be closed down.
If Eurocypria continued to operate it would be at both its and Cyprus Airways’ financial detriment, the study said. Other countries, especially tourist destinations such as Malta, had shown that a state has difficulty in maintaining two airlines independent of its size, the study added.
Moreover as a charter company Eurocypria had no viable long-term future in Cyprus and was up against the most intense competition from low budget carriers in its history. The study pointed out that as a charter airline Eurocypria was vulnerable to collapse like similar other charter airlines.
The study was commissioned by CYNIKA- SEK, SIDIKEK- PEO, PASYPI, ASSYEKA and SYPKA last year following the proposed government funding of Eurocypria. It was carried out by aviation experts Rigas Doganis and Andy Hofton to assess the viability of charter airline Eurocypria and the sustainability of both companies in the Cyprus market.
But the charter airline hit back yesterday saying the study had been carried out by a consultant (Rigas) frequently employed by Cyprus Airways, and nor had Eurocypria ever been contacted.
Putting out a press statement of its own, Eurocypria said nearly half of all tourists arrived in Cyprus on charter flights.
“46 per cent of tourists come to Cyprus come on charter flights due to the great distances between [Cyprus and] countries of origin,” it said.
The airline said it had also pre-sold a large number of its flights for the summer of 2010 and was in negotiation for the sale of its remaining flights.
“This shows that not only are its activities not shrinking but that it is on track for recovery,” said Eurocypria.
Nevertheless the study also concluded that the existence of two state carriers under no circumstances guaranteed great tourist arrivals for Cyprus.
CYNIKA-SEK chairman Andreas Pierides said the study had concluded what the five unions had always believed: that Cyprus cannot cope with the existence of two competing state airlines. Pierides made it clear that allowing the current situation to continue would lead both companies to financial ruin.
He said: “Envisaging the catastrophic implications for workers that operating two separate companies would have, and considering that this is an issue for which political decisions in the right direction must be taken as soon as possible, all five unions considered there was no time for delay. That is why we took the initiative and commissioned this study in the hope that this time the factual findings and objective discoveries will reach deaf ears, and the appropriate action taken.”
He said the unions would wait for the government to take immediate steps that created a future for Cyprus’ air carriers which would in turn better serve local and foreign travellers and would create better prospects for development.
“Yes the employees of Cyprus Airways and Eurocypria have every reason for concern. That is why they are waiting for such decisions to be taken which will eventually create a healthier and helpful prospect,” he said.
The study concluded that it was futile to maintain a damaged company based on an outdated model, he said.
As unionists they would stand by Eurocypria employees and under no circumstances would they accept workers victimisation, he said.
Elsewhere the report concluded that Eurocypria had unavoidably started competing more and more with Cyprus Airways for independent travellers and this competition would reduce the air fares of both airlines. For Cyprus Airways this meant that other than the pressure faced from international airlines, it would have to compete locally with a weak player which would be under pressure to reduce airfares to survive.
“If Eurocypria continues to operate the competition with Cyprus Airways will intensify with negative results for both,” Pierides said.
Eurocypria said it would closely examine the study further.
